A Beginner's Guide To Alibaba Group

The genesis of the Alibaba Group, which you likely know simply as “Alibaba,” dates back to 1999 when English teacher Jack Ma created the B2B portal Alibaba.com, a platform to connect Chinese manufacturers with overseas buyers. Today, Hangzhou-based Alibaba Group is a publicly traded group of eCommerce businesses that raised US $25 billion with its IPO in September 2014. As the largest IPO ever, it gave Alibaba a market valuation post-IPO day valuation of $231.4, topping valuations of American giants such as Walt Disney and Boeing and beating out eCommerce rivals such as Amazon and eBay.

Alibaba Group is a giant, but it can be confusing to make sense of its various holdings, which range from marketplaces like Taobao Marketplace and Tmall.com to payment services like Alipay. This guide breaks out each major business unit in the Alibaba Group family and explains how they work together.

Alibaba Group's IPO day on the York Stock Exchange, September 19, 2014. Photo credit: iStock

Alibaba.com

Alibaba.com is an eCommerce platform for small businesses, and the catalyst for the Alibaba Group empire. Linking up millions of buyers and suppliers from all around the world, it helps small businesses find manufacturers, exporters, and wholesalers for their sourcing needs.

Sellers on the site offer every product imaginable, including apparel, electronics, health and beauty, agriculture and food, industrial parts and tools. Alibaba.com offers over 40 categories of goods and is available in 190+ countries and regions. Buyers and sellers swap 100,000 messages on a daily basis.

In October of 2014, Alibaba.com announced an integration with Bigcommerce, an online store platform for small businesses. Bigcommerce vendors can take advantage of Alibaba.com’s service including its payment protection platform, while Alibaba’s vendors have the opportunity to sell products to a wider spectrum of customers.

Taobao operates on a vendor rating system via the Wangwang Chat service that allows buyers to communicate directly with sellers to bargain or determine the authenticity of a product. After the buyer and seller strike a deal, escrow payment service Alipay (another of Alibaba’s related companies, described below) provides consumer confidence when dealing with small merchants. The customer doesn’t have to pay for the product until they receive it, and upon receipt the customer rates the vendor and releases payment.

Tmall.com

Launched in 2010, Tmall.com is a B2C open platform that allows brands to sell their goods and services direct to consumers in China. Tmall.com shares Taobao’s infrastructure and uses Alipay’s payment system, but vendors must be approved in order to set up a store in the marketplace. If Taobao is the largest garage sale in the world, Tmall is the largest mall. Companies from luxury brands like Hugo Boss to consumer goods such as Costco have set up stores on the platform. While accidentally buying counterfeit goods might be an issue on Taobao, Tmall.com's rigorous vetting system for brands ensures product authenticity. Tmall.com also requires the seller to be either the brand itself, or the manufacturer of the brand. To date, Tmall.com is home to 70,000 official stores including brands like Hugo Boss, Calvin Klein, Burberry, Costco, Proctor & Gamble, and Samsung.

Since the platform serves greater China, payment options are varied and include Visa, MasterCard, PS, JCB or Alipay Card. Drawing from the strength of Taobao and Tmall.com, Juhuasuan sells products from well known brands including Apple, L’Oreal, Unilever, Proctor & Gamble and Adidas. In 2012, Juhuasuan reported $20 billion RMB in transaction volume, more than double of the previous year.

Alibaba Cloud Computing

Alibaba Cloud Computing, or AliCloud for short, provides a comprehensive suite of cloud computing services for Alibaba Group’s online and mobile commerce ecosystem sellers and third-party customers and businesses. AliCloud has over 1.4 million customers as of June 2014 (whether using the services directly or indirectly via ISVs). Over 100,000 corporate websites, operating systems and applications run on AliCloud and it currently has five data centers in Hangzhou, Qingdao, Beijing, Shenzhen and Hong Kong.

Similar to Amazon Web Services, AliCloud started off serving Alibaba’s online marketplace and payment services and took on external customers such as Chinese mobile and gaming companies. AliCloud also hosts the annual ‘AliCloud Worldwide Developer Conference,’ which attracted over 10,000 participants in 2014.

Not only does Alibaba Group have the growth in China to fuel its revenues, but the high growth economies of India and Southeast Asia are on its doorstep. As large as Alibaba Group already is, it’s not hard to see that it might just be getting started.

Joshua Steimle is the CEO of MWI, a digital marketing agency with offices in the U.S. and Hong Kong.